Funding Arb Simulator

How to use this tool

The core idea behind funding arb is this: when a perp's funding rate runs persistently positive, longs are paying shorts; if you buy 10,000 USDT of spot BTC and simultaneously short 10,000 USDT of perp (1x), the price direction nets out and you collect funding every 8 hours. It's the most common "spot + offsetting perp" delta-neutral structure in crypto.

Worked example: BTC funding rate = 0.01% per 8h, principal 10,000 USDT, holding 24 hours (three settlement periods). Theoretical income = 10,000 × 0.0001 × 3 = 3 USDT, which annualises to 0.01% × 3 × 365 = 10.95% APR. The number can hit 30–60% APR in euphoric bull regimes and crash to near zero or negative in bear markets.

After you pull the live rate from OKX, change the holding time to see how the number of settlement periods updates. Note that not every OKX perp uses the standard three-per-day cadence — some altcoin perps settle on 4h or 2h cycles. Inspect the fundingTime deltas in the API response if you're trading anything outside BTC and ETH.

The math behind it

Per-settlement cash flow = Principal × funding rate
Settlement periods = floor(hours / 8)
Total funding = per-settlement × periods × direction (+ short / - long)
Annualised = funding × 3 × 365 (for 8h cadence)

Delta-neutral PnL = + funding         (long spot + short perp, positive rate)
                    - borrow interest (if shorting on margin)
                    - round-trip fees × 2 (entry + exit on both legs)
                    - funding-rate flip risk

Real-world delta-neutral cost includes: (1) taker fees on both legs at entry; (2) borrow interest, if you're short-selling rather than hedging your own spot; (3) the funding rate itself can reverse during your holding period — that's the biggest source of uncertainty.

Common mistakes

"Positive funding equals risk-free yield." No. Funding reflects market positioning; the long-run mean is close to zero. A stretch of positive funding tends to mean-revert, and if you opened the short leg the day before the flip, you start paying immediately.

"Spot-hedged means zero-risk delta-neutral." Perp mark price drifts from index by design — your hedge will run a temporary mark-to-market loss. In extreme moves (perp dives faster than spot during a flush), the hedging leg can be margin-called and force-closed.

"30% APR is risk-free money." It isn't — it's compensation for liquidity risk, venue risk, and funding-flip risk. The genuinely risk-free rate is short-dated T-bills at 4–5%. Any "arb" materially above that is hiding the cost somewhere.